EU Constitution and its replacement: an economist’s perspective, Part 2

Richard Baldwin10 June 2007

Negotiations on the new treaty should focus on the rejected Constitution’s four key changes: new Council of Ministers voting rules, inclusion of the Charter of Fundamental Rights, removal of the ‘pillar’ system, and generalisation of the passerelle and flexibility clauses.

Menu à la carte, or table d'hôte? The bulk of the new treaty will almost surely consist of items already on the Constitution’s menu of changes. The current debate on the EU’s new treaty suggests that EU leaders will, on 22 June 2007, decide which parts of the Constitution get into the new treaty, and which parts are put aside or renegotiated. The German Presidency wants it to be a "menu table d'hôte" with very limited choice for negotiators. Poland, leading a band of nations who were never happy with the Constitution, want negotiators to revisit a wider range of issues, a "menu à la carte," if you will.

As a prelude to discussing what should and should not be in the new treaty, this column reviews the Constitution’s menu of changes. In my view, there are three types: non-changes, non-laws and major legal changes.

Non-changes

By volume, the “non-changes” are the most important. These codify existing practices (e.g. primacy of EU law) or are renumbered articles from earlier treaties. They are non-changes since they apply now and will continue to apply with or without a new treaty. These were included in the Constitution for legal reasons (to maintain all the treaties at the same level of law, as argued by my last column), or as a gesture to federalists who were pleased to see de facto become de jure. As part of the effort to make the new treaty look like something that does not require a referendum, the non-changes will probably be dropped.

Non-Laws

Fewer in number, but important for marketing purposes, are the “non-laws.” These were among the most widely discussed, but they are political and administrative changes that could be undertaken without a new treaty. They include:

- Advisory role of national parliaments;

- Creation of a Council President and modifications of the rotating Presidency;

- Citizens’ right to petition Parliament;

- Reorganisation of EU foreign policy and the creation of a ‘Union Minister of Foreign Affairs’;

- Right to quit the EU;

- Opening of some Council of Ministers meetings to the public.

In the same basket are the symbols – the flag, the song, etc.

Keep history in mind. The EU has a long record of making big changes without treaties; all that is needed is political consensus. For example, in 1974 French President Giscard d’Estaing thought it would be useful to hold periodic meetings of European leaders. The others agreed and presto, the most influential body in the EU – the European Council – was created with a press release. It guided European integration for 12 years before being mentioned in a treaty.

None of the non-laws need a treaty change. A treaty’s permission is required for national Parliaments to send their views to the Commission, or for EU leaders who sit on the European Council to rearrange their working practices. EU citizens already petition the Parliament regularly (a recent one demanded a ban on trading cat and dog fur). The European Council could appoint a ‘Minister of Foreign Affairs’ tomorrow since even under the Constitution the Minister has no direct power. Everything he/she did would be subject to the usual decision-making machinery. Although there is no formal provision for quitting the EU, Greenland (which was part of Denmark when it joined in 1973) quit in 1985 after gaining functional independence and holding a referendum on the matter; Europe could hardly refuse. Finally, the Council does not need a treaty to invite along a few reporters.

Why were non-laws in the Constitution? My view is that they backed up claims that the Constitution brought the EU closer to the people, and backed up federalists’ claim that it was a big step forwards for Europe. Some of these are likely to be in the new treaty; they are a cheap way of keeping federalists happy.

Major legal changes

There are, in my reading of the Constitution, four big changes – major changes that cannot take effect without a new treaty: (1) New voting rules for the Council of Ministers; (2) Inclusion of the Charter of Fundamental Rights; (3) Removal of the ‘pillar’ system; and (4) Passerelle (or ‘bridging’) and flexibility clauses.

In any organisation, rules on how new laws are made are laid down in the highest level of law. In the EU, this is the Treaty of Rome and the Treaty of Maastricht as modified by subsequent treaties (‘the Treaties’ for short). The law-making rules – including Council voting rules – can only be changed by amending the Treaties and that requires a new treaty.

The inclusion of the Charter of Fundamental Rights is critical since it raises this list of rights to the highest level of EU law – a level that is higher than that of the national laws of EU members due to the primacy of EU law. Britain insisted on language in the Constitution stating that the Charter’s inclusion would not be used to make new EU laws, but as discussed in my last column, the pillars’ removal brings this commitment into question.

The years following the 1986 Single European Act witnessed a steady expansion of the EU’s “competencies”, i.e. the areas where the EU’s institutions exercise authority. To put a halt to this “competency creep,” EU leaders set up the famous ‘three pillars’ in the Maastricht Treaty. Things in the first pillar are subject to supra-national decision making and the European Court’s authority, things in the second pillar (Foreign affairs) and the third pillar (Home affairs) are not. (My students remember the pillars thusly: in the EU, economics comes first, justice comes last and foreigners get in-between the two.) Removing the pillars might, or might not lead to a resumption of competency creep – it would depend upon how activist the Commission and Court decided to be.

The passerelle and flexibility clauses are big changes; they remove the referendum trigger on more supranationality. Passerelles (sometimes translated as ‘bridging clauses’) exist in the current Treaties for specific issues, but the Constitution generalised their applicability to everything but foreign affairs and defence matters. The main passerelle procedure (Article IV-444) empowers the Council to switch to supranational decision-making (from unanimity among states to majority voting) in many policy areas. This requires unanimous Council approval, agreement of the European Parliament, and each national parliament has a veto. The national leaders on the European Council include all the leaders of national parliaments and the European Parliament gains power under majority voting, so the last two conditions are unlikely to act as constraints.

The intent of the passerelle clause is obvious – avoid national referendums on initiatives that extend EU supranationality to new areas. The motives can also be seen from the fact that the passerelle can only lead to more supranationality; they do not allow EU leaders to switch a policy area from majority voting to unanimity. The generalisation of the passerelle is one of the main reasons proponents of an ever deeper EU are strongly in favour of the Constitution. It is also why opponents of the same are strongly against it (The Economist magazine and British conservatives, for example).

The flexibility clause (Article I-18) grants the EU the power to give itself the power necessary to attain its objectives, even if that power is not granted by the Constitution. This clause exists in the Treaty of Rome and was the source of ‘creeping competency.’ However, under current law, the Maastricht pillars limit the flexibility clause to first pillar issues (economic integration). The Constitution applies it to all areas except those explicitly excluded (defence policy, the Charter of Fundamental Rights, etc.).

No one can know what the full implications of the passerelle and flexibility clauses would be. Europhiles have faith that the new powers would be used wisely. Euro-sceptics fear that they would be abused by out-of-touch elites to force through more integration than many EU citizens want.

The fourth and final column will discuss what, in my view, must be in the new treaty for it to be a success. The next (third) column covers the final bit of background – the debunking of the myth that the Constitution was a treaty like no other – some sort of latter-day Treaty of Rome.

See details see Chapter 2.4.2 of The Economics of European Integration, Baldwin and Wyplosz, McGraw-Hill, 2005.

The so-called “Luxembourg Compromise” is a historical exception. This effectively gave any member state a veto on an issue that it considered to be critical to its national interests, despite the fact that the issue was – according to the Treaties – to be decided on the basis of majority voting. It completely changed the Treaty of Rome’s law-making procedures – something that should have required a new treaty. It was implemented with a press release, the ‘Final Communiqué” of 29 January 1966 and seriously hindered EU decision-making for decades.